Project 2 Essay Example | Topics and Well Written Essays - 500 words

Project 2 - Essay Example Because of the ripple effect, the loss of jobs resulting in unemployed workers, reduces the overall dollar amount of discretionary income and this itself has other economic ramifications. United States workers often take action and lobby their congressmen to limit the amount of foreign imports and overseas production. If successful, the result may be tariffs or quotas or both. Tariffs are taxes on each item imported. Quotas set a limit on the number of items permitted to enter the country. Both cause the prices to rise because the foreign manufacturer raise the selling price in US markets. This in turn often causes Americans to purchase American products because of the lower price. This increases the demand for US products and the need for increased production. Free trade therefore exists within US borders to increase domestic levels of production and benefit the employees of those companies and the US economy overall. An added benefit passed on to the consumer is reasonable pricing for the items. In popularly held beliefs the American producers of wine (i.e. California vineries) would benefit from a large tariff on French and German wine because the tariff imposed on French and German exporters would be passed on to the consumers in the American market thus prohibiting them from buying them at such high prices. They would in turn buy more domestic wines compared to imports. Theoretically though, both would benefit because there are many wealthy American citizens willing to pay higher prices for imports because of the real or imagined perception that they are superior. It would require examination of the American markets to see if sales actually rise when such tariffs are imposed and a comparable examination of French and German companies to see if sales remain the same even though they are higher priced or if the added cost passed onto the consumer maintains the same level of profits. Protectionist trade barriers might not save American jobs or